India’s first low-cost carrier Air Deccan will become costlier in the next few weeks, as its new promoter UB Group looks to pull the airline out of losses amid rising operating costs.
UB Group will also increase fares on its other scheduled carrier Kingfisher Airlines, its Chairman Vijay Mallya told reporters here. He added that market regulator SEBI has approved his Group’s open offer for acquiring additional 20 per cent stake in Deccan Aviation Ltd.
“Kingfisher and Air Deccan fares will go up in the next few weeks so that these two companies don’t incur losses. We are not, after all in the business to make losses,” the liquor baron-turned-aviation tycoon said.
Air Deccan Managing Director G R Gopinath had said last week that the fares may be increased by Rs 500-1,000, but did not say when. The budget carrier, which was launched in 2003, posted a net loss of Rs 246.50 crore for the nine-month period ended March 31, 2007 but expects to earn profits in the first quarter of FY08.
Air Deccan has imposed a congestion charge of Rs 150 per ticket to offset losses on account of fuel cost incurred due to circling over busy metro airports while awaiting permission to land.
Mallya had acquired 26 per cent stake in Deccan Aviation, the holding company of Air Deccan, for Rs 550 crore in May.
“We have received SEBI approval for an open offer,” the UB Group Chairman said, speaking on the sidelines of the launch of a lifestyle TV channel, NDTV Good Times, here.
Shares of Air Deccan closed at Rs 137.25, up 0.88 per cent, on the BSE on Thursday.
